A Natural Post-Cyprus Play

Last week was too soon to recommend U.S. stocks, particularly bank stocks, off of the Cyprus situation. That's no longer the case. As harsh as this deal looks toward those in the Cyprus banks, it does protect the 100,000-euro account, which means it's pretty much similar to what happens in the U.S. if you are in a bank that's been seized by the government. Everyone loses everything, except for the assets covered by Federal Deposit Insurance Corporation.

If that is somehow a precedent, so be it. I don't see it that way.

Now it is time to reflect on what is rotten -- Europe and the euro -- vs. what isn't: the U.S. and the dollar. We have to recognize that bank runs in Europe, even simple ones as in Cyprus, make it so the money will come to the U.S. from now on. You don't want it in the euro -- it can't recover much of its lost ground, because it will be suspect due to the next round of crises to occur in a place to be determined at a later date.

You don't want it in the British pound, which is being purposely devalued. The yen's become a laughingstock currency. The Chinese currency? The ruble? The peso?

I don't think so.

No, I am not rooting for failure in Europe, and I think the Cyprus plan is about as good as it's going to get when you have regulators at last paying attention to things, the way our regulators at last paid attention to the California, Arizona and Texas savings-and-loan banks during that crisis in our country.

I am just saying the bears should be careful what they wish for. Last week was a real bad week for U.S. banks. The lead bank, JPMorganChase (JPM), which is like the lead dog in a husky race, is so caught up in bad publicity -- bad publicity that will of course mean nothing. At the same time, there are more lawsuits involving the agencies and outfits like Wells Fargo (WFC), which is breaking out on big insider-buying but was momentarily stopped by the parade of bad news.

Why do we focus on Europe at all, especially after last week's shrug-off? I think it's because this is a compelling story, something that frightens everyone. It sure beats filing stories on Williams Sonoma (WSM), or the run-up in Target (TGT), or the incredible performance of some of the natural gas stories.

They have no drama. As someone who has covered business news for longer than just about anyone still around, I have to tell you that it is a lot more fun to cover drama.

But now it is time to focus on what happens when people need the reaction to Cyprus to be a bad one. I always feel compelled to tell people how it works. When people have minimal exposure to U.S. stocks or are short stocks, they need to spread the word, and quickly, that very big pools of money will pull out of -- and then you provide the country name. Let's just say [fill in the blank], and that's going to lead to [blank] happening which will cause [blank] to get hit.

You can put in whatever countries you want. It doesn't really matter. Just make it hard enough to refute.

That causes U.S. futures to go down a great deal, so then you are stuck with people like me to come on television at 9 a.m. and explain how what you are hearing isn't true. But the damage is usually done until the 45-minute mark. Then the money that has nothing to do with Cyprus, and dismisses it, comes to play and gets good prices. It is a terrific time to be nimble.

So now that you know the fill-in-the-blank game and we know the Federal Reserve is on hold, you have to try to figure out where that money's going to go in the U.S.

It could go natural gas, but if the weather gets warm later in the week, that trade will wilt. Caterpillar (CAT) has made the industrials difficult to own because of the "who's next" factor. Tech? Oracle's (ORCL) made a mess of that. Same with the Cisco (CSCO) downgrade wherein it seemed as if the analyst had its number. Retail works for certain -- maybe too well, given that the Merrill Lynch Retail HOLDRS ETF (RTH) hit a new high.

So how about banks? JPMorgan is almost through the press gauntlet, because those stories are getting really boring. Wells Fargo's right. We like KeyCorp (KEY) and SunTrust (STI) -- and don't forget that Bank of America (BAC) has had a real rest here.

Last week, it was very glib to suggest this kind of reaction when you had big-time strategists shouting "Lehman," and other bearish strategists and a former Fed chief telling you that things are good. But the charts have had a nice rest, so I think the group's a natural here.

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